Coveting Virtual Property

Twenty years ago, we all heard stories about teenagers being mugged and killed for shoes. In 2005, we heard that children were being mugged and killed for their iPods. Now, it appears as if the most coveted items are neither shoes nor electronics, but virtual property. Last week, a Dutch court convicted two teens, ages fourteen and fifteen, for stealing a virtual amulet and mask on the game RuneScape. The two youths coerced a thirteen-year-old into transferring his virtual property by physically strangling and kicking him. The court held that the virtual items were considered “goods” under Dutch law. Therefore, the youths’ actions satisfied the elements of theft, and the two were sentenced to 200 and 160 hours of community service, respectively.

U.S. courts have yet to decide whether virtual property deserves the same protections as physical property. When that decision is made, it is sure to be a significant one. Not only will the decision determine whether a person can be subjected to criminal penalties for virtual property theft, but the decision could also have major implications for police departments and the Internal Revenue Service.

This past February, Final Fantasy player Geoff Luurs complained to the Blaine, Minnesota police department that almost $4,000 in virtual goods had been stolen from him. The police investigators, believing that the virtual goods were “devoid of monetary value,” decided that no crime had been committed and refused to arrest the alleged perpetrator. It’s easy to see why the Blaine police officers were not anxious to state that virtual property is the equivalent of actual property. Investigating these increasingly more common virtual thefts would certainly put a strain on police departments around the country.

On the other hand, the IRS is probably anxious to assert that virtual goods are, indeed, actual property. The general rule is that all income, whether in monetary form or any other, is taxable. While I am no tax expert, it seems probable that the IRS can already tax the financial income a person makes by selling his or her virtual property on ebay. If virtual property is legally considered actual property, then it is possible that it would be taxable in other situations as well. Although it seems as if the IRS would jump at this opportunity, the agency would have to actually enforce this taxation, which would strain their resources as much, if not more, than it would the resources of law enforcement agencies. So maybe the IRS isn’t anxious to classify virtual goods as property after all . . .